Second Quarter and Half Year Financial Statement for the Period Ended 30 June 2018

Transcription

1 Second Quarter and Half Year Financial Statement for the Period Ended 30 June August 2018

2 Table of Contents Page No 1(a) Income statement 2 1(a)(i) Consolidated statement of comprehensive income 3 1(b)(i) Statements of financial position 7 1(b)(ii) Borrowings and debts securities 23 1(c) Consolidated statements of cash flows 24 1(d)(i) Consolidated statement of changes in equity 28 1(d)(ii) Changes in share capital 32 1(d)(iii) Total number of issued shares 32 1(d)(iv) 1(d)(v) Statement of sales, transfers, disposals, cancellations and/or use of treasury shares 32 Statement of sales, transfers, disposals, cancellations and/or use of subsidiary holdings 32 2 & 3 Audit statement 32 4 Accounting policies 33 5 Changes in accounting policies 33 6 Earnings per share 34 7 Net asset value per share 34 8 Review of Group s performance 35 9 Variance from previous prospect statement Outlook & 12 Dividend Interested persons transactions Use of proceeds as at 30 June Confirmation by the Board on financial results Confirmation that the issuer has procured undertakings from 47 all its directors and executive officers Page 1 of 47

3 UEN: G Second Quarter and Half Year Financial Statement for the Period Ended 30 June 2018 PART I 1(a) INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALFYEAR AND FULL YEAR RESULTS An income statement and statement of comprehensive income, or a statement of comprehensive income, for the Group, together with a comparative statement for the corresponding period of the immediately preceding financial year Second Quarter ended 30 June Half Year ended 30 June Increase/ (Decrease) Increase/ (Decrease) $ 000 $ 000 % $ 000 $ 000 % Revenue 27,352 34,454 (20.6) 50,393 64,202 (21.5) Cost of sales (25,536) (26,388) (3.2) (42,947) (50,156) (14.4) Gross profit 1,816 8,066 (77.5) 7,446 14,046 (47.0) Other income Other gains/(losses) 163 (23) (231) (122) 89.3 Expenses Administrative (1,916) (2,846) (32.7) (4,343) (5,373) (19.2) Finance (285) (18) 1,483.3 (310) (38) Share of profits of associated companies and joint ventures (69.3) 162 2,320 (93.0) Profit before income tax Income tax credit/(expense) 296 5,801 (94.9) 3,654 11,321 (67.7) 6 (849) (100.7) (524) (1,316) (60.2) Net profit 302 4,952 (93.9) 3,130 10,005 (68.7) Gross profit margin 6.6% 23.4% 14.8% 21.9% Net profit margin 1.1% 14.4% 6.2% 15.6% Effective tax rate n.m. 14.6% 14.3% 11.6% Net profit attributable to: Equity holders of the Company Noncontrolling interests 107 4,952 (97.8) 2,950 10,005 (70.5) 195 n.m. 180 n.m ,952 (93.9) 3,130 10,005 (68.7) n.m. not meaningful Page 2 of 47

4 1(a)(i) Consolidated Statement of comprehensive income for the second quarter and halfyear ended 30 June 2018 Second Quarter ended 30 June Half Year ended 30 June Note Increase/ (Decrease) Increase/ (Decrease) $ 000 $ 000 % $ 000 $ 000 % Net profit 302 4,952 (93.9) 3,130 10,005 (68.7) Other comprehensive income: Currency translation differences relating to financial statements of foreign a subsidiary corporation i (1) n.m. (1) n.m. Financial assets, availableforsale Fair value gains, ii net of tax 12 n.m. 5 n.m. Total comprehensive income, net of tax 301 4,964 (93.9) 3,129 10,010 (68.7) Total comprehensive income attributable to: Equity holders of the Company 106 4,964 (97.9) 2,949 10,010 (70.5) Noncontrolling interests 195 n.m. 180 n.m ,964 (93.9) 3,129 10,010 (68.7) Note: (i) (ii) Currency translation difference was attributed to (a) assets and liabilities of foreign operations that are translated to Singapore dollars at the exchange rate at the reporting date and (b) income and expenses of foreign operations that are translated to Singapore dollars at the exchange rate at the date of transactions. Fair value gains were mainly attributable to higher quoted prices of financial assets, availableforsale. n.m. not meaningful. Page 3 of 47

5 (i) Additional disclosures Profit before income tax was arrived at: Second Quarter ended 30 June Half Year ended 30 June Increase/ (Decrease) Increase/ (Decrease) $ 000 $ 000 % $ 000 $ 000 % After charging: Nonaudit fee paid to the auditors of the Company Amortisation of intangible assets Depreciation of property, plant and equipment Nontrade receivables written off (5.8) n.m. 27 n.m. Directors remuneration Directors of the 613 1,415 (56.7) 1,473 2,455 (40.0) Company Other directors Directors fee Interest expense Bank borrowing 260 n.m. 260 n.m. Finance lease liabilities (5.6) (5.3) Lease liabilities i 8 n.m. 14 n.m. (Gain)/loss on foreign exchange ii Employees compensation cost (163) ,613 1, Included in the cost of sales are the following: Depreciation of property, plant and equipment Depreciation of rightofuse assets i Amortisation of intangible assets Employees compensation cost ,228 1, n.m. 234 n.m ,013 6,743 (10.8) 12,216 13,401 (8.8) Note: (i) has chosen to adopt SFRS(I)16 which is effective for annual periods beginning on or after 1 January Under the new SFRS(I)16, the Group has recognised rightofuse assets and lease liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. (ii) (Gain)/loss on foreign exchange mainly arose from the revaluation of assets denominated in Australian dollar, United States dollar and Indonesian Rupiah to Singapore dollar. n.m. not meaningful. Page 4 of 47

6 Note Second Quarter ended 30 June Half Year ended 30 June Increase/ (Decrease) Increase/ (Decrease) $ 000 $ 000 % $ 000 $ 000 % After crediting: Interest income Bank deposits Financial asset, availableforsale 13 n.m. 26 n.m. Gain/(loss) on disposal of property, plant and equipment (net) 24 n.m. 39 (19) Government grant n.m. not meaningful. Page 5 of 47

7 (ii) Extraordinary/Exceptional items Nil (iii) Adjustments for under or overprovision of tax in respect of prior periods 30 Jun Jun 2017 $ 000 $ 000 Tax expense attributable to profit is made up of: Profit from current financial period: Current income tax Singapore 451 1,293 Deferred income tax ,316 Under provision in prior financial periods Current income tax Singapore ,316 Page 6 of 47

8 1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year Statements of Financial Position The Company Note 30 Jun Dec 2017* 1 Jan 2017* 30 Jun Dec 2017* 1 Jan 2017* $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 ASSETS Current assets Cash and cash equivalents 66,462 86,107 74,685 3,448 3,547 3,771 Trade and other receivables i 5,781 9,487 13,610 3,893 11,914 10,107 Contract assets ii 18,190 16,469 18,094 90, , ,389 7,341 15,461 13,878 Noncurrent assets Investments in subsidiary iii 19,219 19,219 17,522 corporations Investments in joint ventures iv 5,277 5,495 5,604 Investments in associated v 3,743 3, companies Investment properties vi 53,530 7,200 5,080 Other receivables vii 19,938 16,600 24,026 17,139 16,847 18,194 Financial assets, availableforsale 1,015 Property, plant and equipment 20,164 20,055 19,417 5,209 5,263 5,211 Rightofuse assets viii 775 Intangible assets ix 1,730 1,737 1, ,157 54,262 57,828 41,571 41,335 40,937 Total assets 195, , ,217 48,912 56,796 54,815 LIABILITIES Current liabilities Trade and other payables x 33,639 37,820 41,900 6,042 8,146 8,413 Contract liabilities xi 263 1,840 Finance lease liabilities 1,038 1,067 1,120 Lease liabilities viii 387 Bank borrowing xii 808 Current income tax liabilities 1,570 2,159 1, ,442 41,309 46,813 6,070 8,179 8,432 Noncurrent liabilities Other payables x 10,314 Finance lease liabilities 1,304 1,414 2,028 Lease liabilities viii 375 Bank borrowing xii 25,530 Deferred income tax liabilities 1,152 1, ,675 2,505 2, Total liabilities 76,117 43,814 49,794 6,073 8,182 8,437 NET ASSETS 119, , ,423 42,839 48,614 46,378 EQUITY Capital and reserves attributable to equity holders of the Company Share capital 36,832 36,832 36,832 36,832 36,832 36,832 Other reserves xiii 1,371 1,372 1,373 Retained profits 81,090 84,307 76,218 6,007 11,782 9, , , ,423 42,839 48,614 46,378 Noncontrolling interests 180 Total equity 119, , ,423 42,839 48,614 46,378 Net tangible assets 117, , ,710 42,835 48,608 46,368 (*): has applied the new Singapore Financial Reporting Standards (International) ( SFR(I) ) framework for the financial year ending 31 December 2018 and has applied SFRS(I) with 1 January 2017 as the date of transition, which requires the first SFRS(I) financial statements to include an opening SFRS(I) statement of financial position at the date of transition to SFRS(I). Page 7 of 47

9 Notes to Statements of Financial Position: (i) Trade and other receivables The Company 30 Jun 31 Dec 1 Jan 30 Jun 31 Dec 1 Jan $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Trade receivables Nonrelated parties 2,825 1,809 9,135 Subsidiary corporations 3,831 11,845 10,036 Retentions 862 1,796 2,135 3,687 3,605 11,270 3,831 11,845 10,036 Nontrade receivables Subsidiary corporations Associated company 13 Joint venture Nonrelated parties Less: Allowance for impairment of receivables (688) (688) (688) Nontrade receivables net Loan to joint venture 3,852 Advance to suppliers Deposits 767 1, Prepayments ,781 9,487 13,610 3,893 11,914 10,107 The nontrade amounts due from subsidiary corporations, associated company and joint venture are unsecured, interestfree and repayable on demand. The loan to joint venture was unsecured, interestfree and repaid during the current financial period. Page 8 of 47

10 (ii) Contract assets 30 Jun Dec Jan 2017 $ 000 $ 000 $ 000 Unbilled revenue Construction contracts Due from customers 17,640 14,999 16,592 Construction contract workinprogress 550 1,470 1,502 18,190 16,469 18,094 has adopted a new accounting framework SFRS(I)15 Revenue from Contracts with Customers from 1 January 2018 and the impact of adopting the equivalent SFRS(I)15 is disclosed as above. SFRS(I)15 also includes a cohesive set of disclosure requirements that will result in an entity providing users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity s contracts with customers. (iii) Investments in subsidiary corporations The Company 30 Jun Dec Jan 2017 $ 000 $ 000 $ 000 Equity investments at cost Beginning of financial period/year 17,632 17,632 17,632 Additions * End of financial period/year 17,632 17,632 17,632 Allowance for impairment Beginning and end of financial period/year (110) (110) (110) Loan to a subsidiary corporation Beginning of financial period/year 1,697 Notional fair value of loan 1,697 End of financial period/year 1,697 1,697 19,219 19,219 17,522 Note: (*) Amount is less than $1,000 Page 9 of 47

11 Name of subsidiary corporations Principal activities Country of incorporation 30 Jun 2018 Equity holding 31 Dec Jan 2017 Held by the Company Or Kim Peow Contractors (Pte) Ltd (@) Business of road and building Singapore 100% 100% 100% construction and maintenance Eng Lam Contractors Co. (Pte) Ltd (@) OKP Technical Management Pte Ltd (@)(*) Business of road construction and maintenance Provision of technical management and consultancy services Singapore 100% 100% 100% Singapore 100% 100% 100% OKP Investments Investment holding Singapore 100% 100% 100% (Singapore) Pte Ltd (@)(*) OKP (Oil & Gas) Infrastructure Pte Ltd (@)(&) United Pavement Specialists Pte Ltd (@)(*) Business of carrying out civil engineering projects in respect of oil, petrochemical and gas related businesses in Singapore Provision of rental services and investment holding Singapore 100% 100% 100% Singapore 100% 100% 100% OKP Land Pte Ltd (@) Investment holding and Singapore 100% 100% 100% property development OKP Transport & Provision of transport Singapore 100% 100% 100% Pte Ltd (@)(*) and logistics services Raffles Prestige Investment holding Singapore 51% Capital Pte Ltd (@) Held by subsidiary corporations Bennett WA Investment Property investment Australia 100% Pty Ltd (#) (@) Audited by Nexia TS Public Accounting Corporation. (#) Audited by Nexia Perth. (*) Dormant company. (&) On 14 July 2015, OKP (Oil & Gas) Infrastructure Pte Ltd was granted a licence to operate a representative foreign construction service company in Jakarta, Indonesia. The said licence was valid until 8 July 2018 and there is no intention to renew the licence. Page 10 of 47

12 (iv) Investments in joint ventures 30 Jun Dec Jan 2017 $ 000 $ 000 $ 000 Interests in joint ventures Beginning of financial period/year 5,495 5,604 2,988 Share of profit of joint ventures 82 1,990 2,707 Notional fair value of loan (net) (99) (91) Dividend received (300) (2,000) End of financial period/year 5,277 5,495 5,604 Details of the joint ventures are as follows: Name of joint ventures Principal activities Country of incorporation Percentage of ownership interest 30 Jun 31 Dec 1 Jan Held by subsidiary corporations Incorporated joint ventures CSOKP Construction and Design, construction and Singapore 50% 50% 50% Development Pte Ltd (@)(1) execution of urban developments (including road infrastructure) Forte Builder Pte Ltd (#)(2) Business of general Singapore 50% 50% 50% construction Lakehomes Pte. Ltd. (^)(3) Property development Singapore 10% 10% 10% Unincorporated joint venture Chye Joo Or Kim Peow Business of general Singapore 50% 50% 50% JV (*)(4) construction (@) Audited by Heng Lee Seng LLP. (#) Audited by Nexia TS Public Accounting Corporation. (^) Audited by Ernst & Young LLP. (*) Registered on 4 May (1) CSOKP Construction and Development Pte Ltd ( CSOKP ), incorporated in Singapore on 1 December 2009, remained inactive as at 30 June CSOKP is a joint venture company of OKP Technical Management Pte Ltd ( OKPTM ), a whollyowned subsidiary corporation, and CS Mining Pte Ltd, a subsidiary corporation of China Sonangol International Limited, with a share capital of $100,000 consisting of 100 ordinary shares. OKPTM has a 50% equity interest at a cost of $50,000 (2017: $50,000) in CSOKP. (2) On 8 December 2010, Or Kim Peow Contractors (Pte) Ltd ( OKPC ), a whollyowned subsidiary corporation, entered into a joint venture agreement with SoilBuild (Pte) Ltd ( SBPL ), incorporated in Singapore and a subsidiary corporation of Soilbuild Construction Group Ltd., to form a 50:50 joint venture company. On the same date, the joint venture company, Forte Builder Pte. Ltd. ( FBPL ) was incorporated in Singapore with a share capital of $1,000,000 consisting of 1,000,000 ordinary shares. OKPC has a 50% equity interest at a cost of $500,000 in FBPL. The principal activity of FBPL is the construction of the condominium housing development, comprising one (1) 36storey block of 54 residential units at Angullia Park. Page 11 of 47

13 (3) On 15 August 2013, a joint venture company, Lakehomes Pte. Ltd. ( LH ) was incorporated in Singapore with a share capital of $1,000,000 consisting of 1,000,000 ordinary shares. OKP Land Pte Ltd ( OKPL ), a whollyowned subsidiary corporation, has a 10% equity interest at a cost of $100,000 in LH. The principal activity of LH is to develop a land parcel into an executive condominium at Yuan Ching Road/Tao Ching Road. On 13 September 2013, OKPL entered into a joint venture agreement with BBR Development Pte Ltd, Evia Real Estate (5) Pte Ltd, CNH Investment Pte Ltd and Ho Lee Group Pte Ltd for the aforesaid executive condominium development. (4) On 4 May 2015, a joint venture partnership, Chye Joo Or Kim Peow JV was registered to execute the improvement to Bukit Timah First Diversion Canal Contract 3 (Holland Green to Clementi Road) awarded by the Public Utilities Board. has joint control over these joint ventures as under the contractual agreements, unanimous consent is required from all parties to the arrangements for all relevant activities. s joint arrangements are structured as private limited companies and partnership such that the Group and the parties to the agreements have the rights to the net assets of the private limited companies and partnership under the arrangements. Therefore, these arrangements are classified as joint ventures. The following amounts represent the summarised financial information of the joint ventures: 30 Jun Dec 2017 $ 000 $ 000 Assets Current assets 67, ,877 Liabilities Current liabilities (16,344) (59,198) Net assets 51,212 51,679 Revenue 21, ,573 Expenses (20,702) (281,210) Profit before income tax ,363 Income tax expense (83) (3,881) Net profit ,482 The information above reflects the amounts included in the financial statements of the joint ventures, adjusted to reflect adjustments made by the Group when applying the equity method of accounting. Page 12 of 47

14 (v) Investments in associated companies 30 Jun Dec Jan 2017 $ 000 $ 000 $ 000 Interests in associated companies Beginning of financial period/year 3, Additions 450 Notional fair value of loan (net) 38 1,672 Share of profit of associated companies End of financial period/year 3,743 3, Equity holding Name of associated companies Principal activities Country of incorporation 30 Jun Dec Jan 2017 Held by subsidiary corporations CS Amber Development Property development Singapore 10% 10% 10% Pte Ltd (@)(1) United Singapore Builders General contractors Singapore 25% 25% 25% Pte Ltd (#)(2) Chong Kuo Development Property development Singapore 22.5% Pte Ltd (&)(3) USB Holdings Pte Ltd Investment holding and Singapore 25% Pte Ltd (#)(4) property development (@) Audited by Heng Lee Seng LLP. (#) Audited by Nexia TS Public Accounting Corporation. (&) Audited by Ernst & Young LLP (1) On 27 June 2012, OKP Land Pte Ltd ( OKPL ), a whollyowned subsidiary corporation, entered into an investment agreement with CS Amber Development Pte Ltd ( CSAmber ) and CS Land Pte Ltd, pursuant to which OKPL subscribed for 111,111 ordinary shares in CSAmber, representing approximately 10% of the enlarged issued and paidup share capital of CSAmber. The aggregate consideration for the subscription of the shares is $111,111. accounts for its investment in CSAmber as an associated company although the Group holds less than 20% of the issued shares of CSAmber as the Group is able to exercise significant influence over the investment due to the Group s voting power (both through its equity holding and its representation on the Board). (2) On 8 January 2014, Or Kim Peow Contractors (Pte) Ltd ( OKPC ), a whollyowned subsidiary corporation, entered into a shareholders agreement with Chye Joo Construction Pte Ltd, Ho Lee Construction Pte Ltd, Hwa Seng Builder Pte Ltd, Swee Hong Limited and United Singapore Builders Pte Ltd ( USB ) to tender for and, if successful, undertake Mass Rapid Transit projects, including the construction of related infrastructure such as stations, tunnels and depots. As at 31 December 2014, OKPC had a 20% equity interest at a cost of $200,000 in USB. On 3 June 2015, OKPC acquired another 5% of the issued share capital of USB by way of acquisition of 50,000 ordinary shares for $1.00. Consequently, OKPC had a 25% equity interest at a cost of $200,001 in USB. On 17 August 2015, OKPC was allotted and issued 500,000 new ordinary shares by the capitalisation of its advance to USB and hence, its shareholding in USB increased to 750,000 shares. The shareholding percentage remains unchanged at 25% of the total issued and paidup capital in USB. Page 13 of 47

15 (3) On 20 February 2018, an associated company, Chong Kuo Development Pte. Ltd. ( ChongKuo ) was incorporated in Singapore with a share capital of $2,000,000 consisting of 2,000,000 ordinary shares. OKP Land Pte Ltd ( OKPL ), a whollyowned subsidiary corporation, has a 22.5% equity interest at a cost of $450,000 in ChongKuo. The principal activity of ChongKuo is to develop a residential condominium on the land parcel at Chong Kuo Road. (4) On 29 March 2018, OKP Investments (Singapore) Pte Ltd ( OKPIS ), a whollyowned subsidiary corporation, together with Ho Lee Group Pte Ltd, HSB Holdings Pte. Ltd. and B&D Investment and Property Pte. Ltd. incorporated USB Holdings Pte. Ltd.( USBH ). The principal business activities of USBH are investment holding and property development. The summarised financial information of the associated companies, not adjusted for the proportion of ownership interest held by the Group, is as follows: 30 Jun Dec 2017 $ 000 $ 000 Assets Current assets 299, ,397 Noncurrent assets 46, Liabilities Current liabilities (23,514) (19,703) Noncurrent liabilities (320,521) (276,314) Net assets/(liabilities) 1,514 (7,135) Revenue 38, ,289 Expenses (36,971) (177,788) Profit before income tax 1,512 5,501 Income tax expense (231) (94) Net profit 1,281 5,407 has not recognised its share of profit of an associated company, CS Amber Development Pte. Ltd. amounting to $96,438 (31 December 2017: $328,889) as the Group s cumulative share of losses exceeded its interest in that entity and the Group has no obligation in respect of those losses. The cumulative unrecognised losses with respect to this entity amounted to $104,851 (31 December 2017: $201,289) at the balance sheet date. Page 14 of 47

16 (vi) Investment properties 30 Jun Dec Jan 2017 $ 000 $ 000 $ 000 Beginning of financial period/year 7,200 5,080 5,250 Additions 46,330 2,270 Net fair value loss recognised in profit and (150) (170) loss End of financial period/year 53,530 7,200 5,080 The investment properties are leased to nonrelated parties. s policy is to revalue its investment properties on an annual basis. An update to the fair values will be done at the end of the financial year. (vii) Other receivables (noncurrent) The Company 30 Jun Dec Jan Jun Dec Jan 2017 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Loan to associated companies CS Amber Development Pte Ltd Chong Kuo Development Pte Ltd Notional fair value of loan (net) Less: Allowance for impairment 19,680 19,680 19,680 3,375 (1,709) (1,672) (1,408) (1,408) (1,408) 19,938 16,600 18,272 Loan to joint venture Lakehomes Pte. Ltd. 5,754 Loan to subsidiary corporation 17,139 16,847 18,194 19,938 16,600 24,026 17,139 16,847 18,194 The loan to an associated company, CS Amber Development Pte Ltd, is unsecured, interestfree and will be repayable in full on 27 June charged interest at 2.0% per annum above SIBOR from the first drawdown on 27 June has ceased to charge interest on the loan with effect from 1 March The loan to joint venture, loan to subsidiary corporation and loan to an associated company are unsecured and interestfree advances for the purpose of operating and development activities in their respective fields. The loans are not expected to be repaid within the next 12 months. Page 15 of 47

17 (viii) Leases (a) Amounts recognised in the balance sheet 30 Jun Dec 2017 $ 000 $ 000 Rightofuse assets Property 433 Office unit 71 Use of state land for worksites Lease liabilities Current 387 Noncurrent (b) Amounts recognised in the statement of profit or loss Depreciation of rightofuse assets Property 34 Office unit 7 Use of state land for worksites Lease liabilities Interest expense (included in finance costs) 14 has elected to apply SFRS(I)16 Leases for the first time in the 2018 financial statements (initial application date: 1 January 2018), as permitted under the specific transition provisions in the standard. In accordance with the transition provisions in SFRS(I)16 (C5)(b) the new rules will be adopted retrospectively with the cumulative effect of initially applying the new standard recognised on 1 January 2018 (i.e. limited retrospective application). Comparatives for the 2017 financial year have therefore not been restated and as a consequence, a third balance sheet is not required in the year of adoption. Page 16 of 47

18 (ix) Intangible assets The Company 30 Jun Dec Jan Jun Dec Jan 2017 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Composition: Goodwill arising on consolidation 1,688 1,688 1,688 Computer software licences ,730 1,737 1, (a) Goodwill arising on consolidation Cost/net book value Beginning and end of financial period/year 1,688 1,688 1,688 This represents goodwill on consolidation which is the excess of the cost of acquisition over the fair value of the Group s share of the identifiable net assets acquired. (b) Computer software licences Cost Beginning of financial period/year Additions End of financial period/year Accumulated Amortisation Beginning of financial period/year Amortisation charge End of financial period/year Net Book Value Computer software licences relate to fees paid to third parties in relation to the entitlement to use the computer software licences and are amortised over 5 years. Page 17 of 47

19 (x) Trade and other payables The Company 30 Jun Dec Jan Jun Dec Jan 2017 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Current Trade payables Nonrelated parties 20,533 22,740 25, Nontrade payables Subsidiary corporations 5,342 5,342 5,347 Joint venture partner ,342 5,342 5,347 Accrued operating expenses 12,583 14,823 15, ,706 2,925 Other payables ,639 37,820 41,900 6,042 8,146 8,413 Noncurrent Other payables Advance from a minority shareholder 10,314 The nontrade amounts due to subsidiary corporations and joint venture partner are unsecured, interestfree and repayable on demand. An advance from a minority shareholder is unsecured and interestfree advances for the purpose of operating and development activities in their respective fields. The loans are not expected to be repaid within the next 12 months (xi) Contract liabilities The Company 30 Jun Dec Jan Jun Dec Jan 2017 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Advances received 263 1,840 has adopted a new accounting framework SFRS(I)15 Revenue from Contracts with Customers from 1 January 2018 and the impact of adopting the equivalent SFRS(I)15 is disclosed as above. SFRS(I)15 also includes a cohesive set of disclosure requirements that will result in an entity providing users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity s contracts with customers. Page 18 of 47

20 (xii) Bank borrowing The Company 30 Jun Dec Jan Jun Dec Jan 2017 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Current Secured bank term loan 808 Noncurrent Secured bank term loan 25,530 26,338 The secured bank term loan is mainly secured by: First legal mortgage over an investment property of the Group; s shares in a subsidiary corporation; and Corporate guarantee of the Company. s secured bank term loan is denominated in Australian dollar. It bears interest at 1.8% above the bank s cost of fund. Page 19 of 47

21 (xiii) Other reserves 30 Jun Dec Jan 2017 $ 000 $ 000 $ 000 (a) Composition: Currency translation reserve (1) Fair value reserve 1 Asset revaluation reserve 1,372 1,372 1,372 1,371 1,372 1,373 (b) Movements Currency translation reserve Beginning of financial period/year Net currency translation differences of financial, statements of foreign subsidiary corporation (1) End of financial period/year (1) Fair value reserve Beginning of financial period/year 1 (24) Financial assets availableforsale Fair value gains 5 25 Reclassification to profit and loss (6) End of financial period/year 1 Asset revaluation reserve Beginning of financial period/year 1,372 1,372 1,372 Other reserves are nondistributable. Page 20 of 47

22 Explanatory Notes: (i) Current assets Current assets decreased by $21.7 million, from $112.1 million as at 31 December 2017 to $90.4 million as at 30 June The decrease was attributable to: (a) a decrease in cash and cash equivalents of $19.7 million. This was due mainly to the cash used in operations of $1.7 million and cash used in investing activities of $36.9 million, which were partially offset by cash generated from financing activities of $18.9 million; and (b) a decrease in trade and other receivables of $3.7 million due mainly to repayment of loans by a joint venture, Lakehomes Pte Ltd, which were partially offset by: (c) an increase in contract assets of $1.7 million due to (i) the increase in amount due from customers of $2.6 million which relates to work done but not billed in June 2018, which was partially offset by (ii) decrease in construction contract workinprogress of $0.9 million due mainly to lower unbilled amounts expected to be collected from customers for contract work performed up to 30 June 2018 as compared to 31 December (ii) Noncurrent assets Noncurrent assets increased by $50.9 million, from $54.3 million as at 31 December 2017 to $105.2 million as at 30 June The increase was attributable to: (a) (b) (c) (d) (e) an increase in investment properties of $46.3 million resulting from the purchase of the property at 68 Bennett Street, East Perth, Western Australia; an increase in other receivables of $3.3 million arising from an advance to an associated company, Chong Kuo Development Pte Ltd of $3.4 million, which was partially offset by a notional fair value adjustment of loan; the recognition of rightofuse assets of $0.8 million as the Group has applied SFRS(I)16; an increase in investments in associated companies of $0.6 million arising from the cost of investment of $0.5 million in an associated company, Chong Kuo Development Pte Ltd, and the share of profit of associated companies; and an increase in property, plant and equipment of $0.1 million resulting from the purchase of new plant and equipment, which was partially offset by the disposal and depreciation of property, plant and equipment, which were partially offset by: (f) a decrease in investments in joint ventures of $0.2 million due mainly to dividends of $0.3 million received from a joint venture, Forte Builder Pte Ltd, which was partially offset by the share of profit of joint ventures, during the half year ended 30 June Page 21 of 47

23 (iii) Current liabilities Current liabilities decreased by $3.9 million, from $41.3 million as at 31 December 2017 to $37.4 million as at 30 June The decrease was due mainly to: (a) (b) (c) a decrease in trade and other payables of $4.2 million arising from (1) lower accrued operating expenses related to project costs and (2) settlement of some major trade payables; a decrease in contract liabilities of $0.3 million due to utilisation of advance received from a customer; and a decrease in current income tax liabilities of $0.6 million due to lower tax provision resulting from lower profits generated, which were partially offset by: (d) (e) an increase in finance lease liabilities of $0.4 million as a result of the purchase of new plant and equipment to support newlyawarded projects; and a bank borrowing of $0.8 million to finance the purchase of an investment property at 68 Bennett Street, East Perth, Western Australia, during the half year ended 30 June (iv) Noncurrent liabilities Noncurrent liabilities increased by $36.2 million, from $2.5 million as at 31 December 2017 to $38.7 million as at 30 June The increase was due mainly to: (a) (b) other payable of $10.3 million relating to an advance from a minority shareholder extended to a foreign operation for the purpose of purchasing the investment property and working capital needs; a bank borrowing of $25.5 million to finance the purchase of an investment property at 68 Bennett Street, East Perth, Western Australia; and (c) the recognition of lease liabilities of $0.4 million arising from the implementation of SFRS(I)16. (iv) Shareholders equity Shareholders equity, comprising share capital, other reserves, retained profits and noncontrolling interests, decreased by $3.0 million, from $122.5 million as at 31 December 2017 to $119.5 million as at 30 June The decrease was largely attributable to: (a) the dividend payment to shareholders of $6.2 million, which was partially offset by: (b) the profit generated from operations of $3.0 million for the half year ended 30 June 2018, and (c) a noncontrolling interest of $0.2 million arising from the contribution from Raffles Prestige Capital Pte Ltd, during the half year ended 30 June Page 22 of 47

24 1(b)(ii) Aggregate amount of group s borrowings and debt securities (a) Amount repayable in one year or less, or on demand As at 30 Jun 2018 As at 31 Dec 2017 $ 000 $ 000 $ 000 $ 000 Secured Unsecured Secured Unsecured 1,846 1,067 (b) Amount repayable after one year As at 30 Jun 2018 As at 31 Dec 2017 $ 000 $ 000 $ 000 $ 000 Secured Unsecured Secured Unsecured 26,834 1,414 (c) Details of any collateral The above secured borrowings of the Group relate to: (1) finance lease liabilities of $2.3 million secured by way of corporate guarantees issued by the Company and charges over the property, plant and equipment under the finance leases; and (2) bank term loan of $26.3 million secured by first legal mortgage over an investment property of the Group, the Group s shares in a subsidiary corporation and corporate guarantee of the Company. Page 23 of 47

25 1(c) A statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year Consolidated statements of cash flows Cash flows from operating activities Second Quarter ended 30 June Half year ended 30 June $ 000 $ 000 $ 000 $ 000 Net profit 302 4,952 3,130 10,005 Adjustments for: Income tax (credit)/expense (6) ,316 Depreciation of property, plant and equipment ,454 1,336 Depreciation or rightofuse assets Amortisation of intangible assets (Gain)/loss on disposal of property, plant and (24) (39) 19 equipment Share of profit of investments (111) (361) (162) (2,320) accounted for using the equity method Interest income (203) (187) (421) (368) Interest expense Unrealised currency translation loss 1 1 Operating cash flow before working capital changes 1,105 5,965 5,038 10,030 Change in working capital Trade and other receivables (959) 1,327 (147) 6,040 Contract assets (3,734) (7,675) (1,721) (2,944) Trade and other payables 2,111 (741) (4,024) 755 Contract liabilities (263) (788) (263) (1,577) Cash generated from operations (1,740) (1,912) (1,117) 12,304 Interest received Income tax paid (964) (947) (1,052) (947) Net cash (used in)/generated from operating activities (2,501) (2,685) (1,748) 11,699 Cash flows used in investing activities Additions to property, plant and equipment (378) (478) (1,216) (1,341) Additions to investment properties (46,330) (46,330) Disposal of property, plant and equipment Investment in an associated company (450) Advance to an associated company (1,057) (3,375) Advance from a minority shareholder 10,314 Dividend received from a joint venture Repayment of loans by a joint venture 3,852 3,852 Capital contribution for a minority interest for the incorporation of a subsidiary corporation * Interest received Net cash used in investing activities (43,589) (465) (36,866) (1,306) Note: (*) Amount is less than $1,000. Page 24 of 47

26 Consolidated statements of cash flows (Cont d) Second Quarter ended 30 June Half year ended 30 June $ 000 $ 000 $ 000 $ 000 Cash flows from financing activities Repayment of finance lease liabilities (346) (282) (638) (580) Repayment of lease liabilities (133) (261) Interest paid (276) (18) (295) (38) Proceeds from bank borrowing 26,338 26,338 Dividend paid to shareholders (6,169) (4,626) (6,169) (4,626) Bank deposits pledged (38) 1 (36) 17 Net cash generated from /(used in) financing activities 19,376 (4,925) 18,939 (5,227) Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period Effects of currency translation on cash and cash equivalents Cash and cash equivalents at the end of the financial period (26,714) (8,075) (19,675) 5,166 88,282 83,353 81,551 70, (6) 61,870 75,278 61,870 75,278 Explanatory Notes: (i) For the purpose of the consolidated statement of cash flows, the consolidated cash and cash equivalents at the end of the financial period comprised the following: 30 Jun Jun 2017 $ 000 $ 000 Cash at bank and on hand Shortterm bank deposits Trust account Cash at bank 17,968 48, ,104 63,731 Shortterm bank deposits pledged to banks 66,462 (4,592) 79,835 (4,557) Cash and cash equivalents per consolidated statement of cash flows 61,870 75,278 Bank deposits of $4,592,133 (30 June 2017: $4,556,628) are pledged to banks for banking facilities of certain subsidiary corporations. Page 25 of 47

27 (ii) Review of cash flows for the six months ended 30 June 2018 Net cash used in operating activities Our Group reported net cash used in operating activities of $1.7 million in the six months ended 30 June 2018, a decrease of $13.4 million from net cash generated from operating activities of $11.7 million in the six months ended 30 June The $13.4 million decrease in net cash generated from operating activities was due mainly to: (a) (b) (c) a decrease in cash generated from operating activities before working capital changes of $5.0 million; an increase in income tax paid of $0.1 million; and a decrease in net working capital inflow of $8.4 million, which were partially offset by: (d) an increase in interest received of $0.1 million, during the six months ended 30 June Net cash used in investing activities Net cash of $36.9 million used in investing activities was due to: (a) (b) (c) (d) the purchase of new property, plant and equipment of $1.2 million; the purchase of an investment property at 68 Bennett Street, East Perth, Western Australia for $46.3 million; the investment in Chong Kuo Development Pte Ltd for $0.5 million; and an advance of $3.4 million extended to an associated company, Chong Kuo Development Pte Ltd, for the purpose of purchasing the land parcel, construction costs and working capital needs, which were partially offset by: (e) (f) (g) an advance of $10.3 million received from a minority shareholder which was extended to a foreign operation for the purpose of purchasing the investment property and working capital needs; the repayment of loan by a joint venture, Lakehomes Pte Ltd, of $3.9 million; and dividends of $0.3 million received from a joint venture, Forte Builder Pte Ltd, during the six months ended 30 June Net cash generated from financing activities Net cash of $18.9 million was generated from financing activities in the six months ended 30 June This was due mainly to the proceeds from bank borrowing of $26.3 million. This was partially offset by (1) dividend payments to shareholders of $6.2 million, (2) repayment of finance lease liabilities of $0.6 million, (3) interest payments of $0.3 million, and (4) repayment of lease liabilities of $0.3 million, during the six months ended 30 June Overall, free cash and cash equivalents stood at $61.9 million as at 30 June 2018, a decrease of $13.4 million, from $75.3 million as at 30 June This works out to cash of 20.1 cents per share as at 30 June 2018 as compared to 24.4 cents per share as at 30 June 2017 (based on 308,430,594 issued shares as at 30 June 2018 and 30 June 2017). Page 26 of 47

28 (iii) Review of cash flows for second quarter ended 30 June 2018 Net cash used in operating activities Our Group s net cash used in operating activities for the second quarter ended 30 June 2018 was $2.5 million as compared to $2.7 million for the second quarter ended 30 June The $0.2 million decrease in net cash used in operating activities was due to: (a) a decrease in net working capital outflow of $5.0 million, which was partially offset by: (b) a decrease in cash generated from operating activities before working capital changes of $4.8 million during the second quarter ended 30 June Net cash used in investing activities Net cash used in investing activities was $43.6 million for the second quarter ended 30 June 2018, compared to $0.5 million for the second quarter ended 30 June The major outflows for the second quarter ended 30 June 2018 related to (i) the purchase of new property, plant and equipment of $0.4 million, (ii) the purchase of an investment property at 68 Bennett Street, East Perth, Western Australia for $46.3 million and (iii) an advance of $1.1 million extended to an associated company, Chong Kuo Development Pte Ltd. The outflows were partially offset by (i) dividends of $0.3 million received from a joint venture, Forte Builder Pte Ltd, and (ii) the repayment of loan by a joint venture, Lakehomes Pte Ltd, of $3.9 million. Net cash generated from financing activities The net cash generated from financing activities was $19.4 million for the second quarter ended 30 June 2018 as compared with net cash used in financing activities of $4.9 million for the second quarter ended 30 June The major inflow was due mainly to the proceeds from a bank borrowing of $26.3 million. The major inflow was partially offset by (1) dividend payments to shareholders of $6.2 million, (2) repayment of finance lease liabilities of $0.3 million, (3) interest payments of $0.3 million and (4) repayment of lease liabilities of $0.1 million, in the second quarter ended 30 June Page 27 of 47

29 1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year Attributable to equity holders of the Company Share Capital Fair value reserve Asset revaluation reserve Foreign currency translation reserve Retained profits Total Non controlling interest Total equity $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 As at 1 Jan ,832 1,372 84, , ,511 Total comprehensive income for the period * 2,845 2,845 (15) 2,830 As at 31 Mar ,832 1,372 * 87, ,356 (15) 125,341 Total comprehensive income for the period Dividend relating to FY2017 (1) (6,169) (6,169) (6,169) As at 30 Jun ,832 1,372 (1) 81, , ,473 Note: (*) Amount is less than $1,000 Page 28 of 47

30 Attributable to equity holders of the Company Share capital Fair value reserve Asset revaluation reserve Retained profits Total $ 000 $ 000 $ 000 $ 000 $ 000 As at 1 Jan , ,372 76, ,423 Total comprehensive income for the period (7) 5,053 5,046 As at 31 Mar ,832 (6) 1,372 81, ,469 Total comprehensive income for the period 12 4,952 4,964 Dividend relating to FY2016 (4,626) (4,626) As at 30 June , ,372 81, ,807 Page 29 of 47

31 Attributable to equity holders of the Company Share capital Retained profits Total equity $ 000 $ 000 $ 000 The Company As at 1 Jan ,832 11,782 48,614 Total comprehensive income for the period As at 31 Mar ,832 11,925 48,757 Total comprehensive income for the period Dividend relating to FY2017 (6,169) (6,169) As at 30 Jun ,832 6,007 42,839 Page 30 of 47

32 Attributable to equity holders of the Company Share capital Retained profits Total $ 000 $ 000 $ 000 The Company As at 1 Jan ,832 9,546 46,378 Total comprehensive income for the period As at 31 Mar ,832 9,680 46,512 Total comprehensive income for the period Dividend relating to FY2016 (4,626) (4,626) As at 30 June ,832 5,221 42,053 Page 31 of 47

33 1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buybacks, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State the number of shares that may be issued on conversion of all the outstanding convertibles, if any, against the total number of issued shares excluding treasury shares and subsidiary holdings of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. State also the number of shares held as treasury shares and the number of subsidiary holdings, if any, and the percentage of the aggregate number of treasury shares and subsidiary holdings held against the total number of shares outstanding in a class that is listed as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year There have been no changes in the issued share capital of the Company since 31 March Under the Share Buy Back Mandate which was approved by the Shareholders on 26 April 2018, no shares were bought back by the Company during the second quarter ended 30 June There were no outstanding convertibles issued or treasury shares held by the Company and no subsidiary holdings as at 30 June 2018 and 30 June (d)(iii) Total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year 30 Jun Dec 2017 Total number of issued shares (excluding treasury shares) 308,430, ,430,594 1(d)(iv) A statement showing all sales, transfers, disposals, cancellation and/or use of treasury shares as at the end of the current financial period reported on Not applicable 1(d)(v) A statement showing all sales, transfers, cancellation and/or use of subsidiary holdings as at the end of the current financial period reported on Not applicable 2. Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice The figures have not been audited or reviewed. 3. Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of matter) Not applicable. Page 32 of 47

34 4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied Except as disclosed in Note 5 below, the Group has applied the same accounting policies and methods of computation in the financial statements for the current financial period compared with those for the audited financial statements as at 31 December If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change has adopted Singapore Financial Reporting Standards (International) (SFRS(I)) on 1 January In adopting SFRS(I), the Group has applied the specific transition requirements in SFRS(I) 1 Firsttime adoption of Singapore Financial Reporting Standards (International) in preparing the financial information included in this announcement. has also concurrently applied the following SFRS(I)s, interpretations of SFRS(I) and requirements of SFRS(I)s (collectively new accounting standards ) which are mandatorily effective from 1 January SFRS(I): SFRS(I) 15 Revenue from Contracts with Customers which includes the clarifications to IFRS 15 Revenue from Contracts with Customers issued by the IASB in April 2016 SFRS(I) 9 Financial Instruments which includes the amendments to IFRS 4 insurance contracts Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts issued by the IASB in September 2016 Requirements in following SFRS(I)s arising from amendments to corresponding IFRSs issued by the IASB in 2016: SFRS(I) 2 Sharebased Payment arising from the amendments to IFRS 2 Classification and measurement of sharebased payment transactions issued by the IASB in June 2016; SFRS(I) 140 Investment Property arising from the amendments to IAS 40 Transfers of investment property issued by the IASB in December 2016; SFRS(I) 1 arising from the amendments to IFRS 1 Deletion of shortterm exemptions for firsttime adopters issued by the IASB in December 2016; SFRS(I) 128 Investments in Associates and Joint Ventures arising from the amendments to IAS 28 Measuring an associate or joint venture at fair value issued by the IASB in December 2016; and SFRS(I) INT 22 Foreign Currency Transactions and Advance Consideration. The adoption of the new accounting standards does not have any significant impact on the financial information except for SFRS(I) 15 and SFRS(I) 9. SFRS(I) 16 Leases is effective for annual periods beginning on or after 1 January The Group has early adopted the new standard which is permitted by the standard. Page 33 of 47

35 6. Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends Basic/diluted earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the financial period. Second Quarter ended 30 Jun Half Year ended 30 Jun Increase / (Decrease) Increase / (Decrease) $ 000 $ 000 % $ 000 $ 000 % Net profit attributable to equity holders of the Company ($ 000) 107 4,952 (97.8) 2,950 10,005 (70.5) Weighted average number of ordinary shares in issue 308,430, ,430, ,430, ,430,594 Basic earnings per share (cents per share) (98.1) (70.4) Diluted earnings per share (cents per share) (98.1) (70.4) 7. Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares, excluding treasury shares, of the issuer at the end of the (a) current period reported on and (b) immediately preceding financial year The Company Increase / (Decrease) % As at 30 Jun 2018 As at 31 Dec 2017 As at 30 Jun 2018 As at 31 Dec 2017 The Group The Company Net tangible assets ($ 000) 117, ,774 42,835 48,608 (2.5) (11.9) Number of shares 308,430, ,430, ,430, ,430,594 NTA per share (cents) (2.5) (11.9) Page 34 of 47

36 8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following: (a) (b) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on Our Business OKP Holdings Limited is a homegrown infrastructure and civil engineering company in the region. It specialises in the construction of urban and arterial roads, expressways, vehicular bridges, flyovers, airport infrastructure and oil and gasrelated infrastructure for petrochemical plants and oil storage terminals as well as the maintenance of roads and roadsrelated facilities and building constructionrelated works. We tender for both public and private civil engineering and infrastructure construction projects. We have expanded our core business to include property development and investment. We have three business segments: Construction, Maintenance and Rental income from investment properties. Income Statement Review (Half Year ended 30 June 2018 vs Half Year ended 30 June 2017) Current half year ended 30 Jun 2018 Previous half year ended 30 Jun 2017 Increase / (Decrease) $ 000 % $ 000 % $ 000 % Construction 21, , (21,214) (49.3) Maintenance 27, , , Rental income 1, ,203 1,279.8% Total Revenue 50, , (13,809) (21.5) Revenue Our Group reported a 21.5% or $13.8 million decrease in revenue to $50.4 million in the half year ended 30 June 2018 as compared to $64.2 million in the half year ended 30 June The decrease was due mainly to a 49.3% decrease in revenue from the construction segment to $21.8 million, partially offset by (i) a 29.4% increase in revenue from the maintenance segment to $27.3 million and (ii) a 1,279.8% increase in rental income. The decrease in revenue from the construction segment was largely attributable to a lower percentage of revenue recognised from a few construction projects which were reaching completion, as well as no revenue generated from a construction project at the PanIsland Expressway exit to Tampines Expressway during the half year ended 30 June Page 35 of 47

37 The growth in revenue from the maintenance segment was due mainly to the higher percentage of revenue recognised from a few major maintenance projects which were in full swing in the half year ended 30 June The increase in rental income generated from investment properties was due mainly to rental income generated from the newly purchased property at 68 Bennett Street, East Perth, Western Australia during the second quarter ended 30 June Both the construction and maintenance segments are the major contributors to our Group s revenue. On a segmental basis, construction, maintenance and rental income accounted for 43.3% (30 June 2017: 67.0%), 54.2% (30 June 2017: 32.8%) and 2.5% (30 June 2017: 0.2%) of our Group s revenue respectively for the half year ended 30 June Cost of sales Current half year ended 30 Jun 2018 Previous half year ended 30 Jun 2017 $ 000 $ 000 Construction Maintenance 42,553 50,138 Rental income Total cost of sales 42,947 50,156 Our cost of sales decreased by 14.4% or $7.3 million from $50.2 million for the half year ended 30 June 2017 to $42.9 million for the half year ended 30 June The decrease in cost of sales was due mainly to: (a) (b) the decrease in subcontracting costs which were mainly costs incurred for specialised works such as bored piling, asphalt works, mechanical and electrical works, soiltesting, landscaping and metalworks which are usually subcontracted to external parties; the decrease in the cost of construction materials due to lesser utilisation of materials; and (c) the decrease in labour costs during the half year ended 30 June 2018, which were partially offset by: (d) (e) an accrual of additional cost arising from a construction project at the PanIsland Expressway exit to Tampines Expressway following the mutual termination of the project between the client and our subsidiary corporation; and the increase in depreciation of property, plant and machinery and rightofuse assets, during the half year ended 30 June Page 36 of 47

38 Gross profit and gross profit margin Our gross profit for the half year ended 30 June 2018 decreased by 47.0% or $6.5 million from $14.0 million for the half year ended 30 June 2017 to $7.5 million for the half year ended 30 June Our gross profit margin decreased from 21.9% for the half year ended 30 June 2017 to 14.8% for the half year ended 30 June The lower gross profit margin was largely attributable to lower profit margins for some current construction projects as a result of a more competitive pricing environment. Other income Other income increased by $0.4 million or 90.6% from $0.5 million for the half year ended 30 June 2017 to $0.9 million for the half year ended 30 June The increase was largely attributable to: (a) (b) an increase in government grants of $0.3 million received which comprised wage credit payouts received from the Inland Revenue Authority of Singapore (Temporary Employment Credit) and Ministry of Manpower (Special Employment Credit) and incentives received from the Building and Construction Authority for technology adoption and capability development; and an increase in interest income received of $0.1 million due to higher interest earned from higher bank deposits during the half year ended 30 June Other losses The increase in other losses of $0.1 million was due mainly to loss in foreign exchange resulting from the weakening of the US dollar and Australian dollar against the Singapore dollar in the half year ended 30 June Administrative expenses Administrative expenses decreased by $1.0 million or 19.2% from $5.3 million for the half year ended 30 June 2017 to $4.3 million for the half year ended 30 June The decrease was largely due to lower directors remuneration (including profit sharing) accrued as a result of the lower profit generated by the Group for the half year ended 30 June Page 37 of 47

39 Finance expenses Half year ended 30 Jun 2018 Half year ended 30 Jun 2017 $ 000 $ 000 Finance lease liabilities Lease liabilities (a) 14 Bank borrowing (b) Finance expenses increased by $0.3 million or 715.8% from $38,000 for the half year ended 30 June 2017 to $0.3 million for the half year ended 30 June The increase was due to: (a) (b) interest from lease liabilities of $14,000 as a result of implementation of SFRS(I) 16; and interest expenses of $0.3 million incurred on a bank term loan for the purchase of an investment property at 68 Bennett Street, East Perth, Western Australia. Share of results of associated companies and joint ventures Half year ended 30 Jun 2018 Half year ended 30 Jun 2017 $ 000 $ 000 Share of profit of joint ventures (a) 82 1,876 Share of profit of associated companies (b) 162 2,320 (a) Share of profit of joint ventures The share of profit of joint ventures decreased by $1.8 million due mainly to the decrease in share of profit of $1.7 million from Lakehomes Pte Ltd, the developer for the LakeLife Executive Condominium, based on the recognition of profits from the few remaining units of the development which were ready for handover during the half year ended 30 June Page 38 of 47

40 (b) Share of profit of associated companies The $0.4 million decrease in the share of profit of associated companies in the half year ended 30 June 2018 was due mainly to the decrease in share of profit from our associated company, United Singapore Builders Pte Ltd. Profit before income tax Profit before income tax decreased by $7.7 million or 67.7% from $11.3 million for the half year ended 30 June 2017 to $3.6 million for the half year ended 30 June The decrease was due mainly to (1) the decrease in gross profit of $6.5 million, (2) the increase in other losses of $0.1 million, (3) the increase in finance expenses of $0.3 million and (4) the decrease in share of profit of associated companies and joint ventures of $2.2 million. The decrease was partially offset by (1) the decrease in administrative expenses of $1.0 million and (2) the increase in other income of $0.4 million, as explained above. Income tax expense Income tax expense decreased by $0.8 million or 60.2% from $1.3 million in the half year ended 30 June 2017 to $0.5 million in the half year ended 30 June 2018 due mainly to lower profit before income tax, as explained above. The effective tax rates for the half year ended 30 June 2018 and half year ended 30 June 2017 were 14.3% and 11.6% respectively. The effective tax rate for the half year ended 30 June 2018 was lower than the statutory tax rate of 17.0% due mainly to (1) statutory stepped income tax exemption and (2) a tax rebate of 40% on the corporate tax payable. The effective tax rate for the half year ended 30 June 2017 was lower than the statutory tax rate of 17.0% due mainly to (1) the profit before income tax of $11.3 million which comprised share of profit of associated companies and joint ventures of $2.3 million, which was already taxed at the associated company and joint venture levels, (2) statutory stepped income tax exemption and (3) a tax rebate of 20% on the corporate tax payable. Noncontrolling interests Noncontrolling interests of $0.2 million was due to contributions from our subsidiary corporation, Raffles Prestige Capital Pte Ltd in the half year ended 30 June Net profit Overall, for the half year ended 30 June 2018, net profit decreased by $6.9 million or 68.7%, from $10.0 million for the half year ended 30 June 2017 to $3.1 million for the half year ended 30 June 2018, following the decrease in profit before income tax of $7.7 million which was partially offset by the decrease in income tax expense of $0.8 million, as explained above. Our net profit margin decreased from 15.6% for the half year ended 30 June 2017 to 6.2% for the half year ended 30 June Page 39 of 47

41 Income Statement Review (Second Quarter ended 30 June 2018 vs Second Quarter ended 30 June 2017) Current second quarter ended 30 Jun 2018 Previous second quarter ended 30 Jun 2017 Increase / (Decrease) $ 000 % $ 000 % $ 000 % Construction 8, , (13,776) (61.2) Maintenance 17, , , Rental income 1, ,166 2,480.9 Total Revenue 27, , (7,102) (20.6) Revenue Our Group recorded a decrease in revenue in the second quarter ended 30 June 2018 of $7.1 million or 20.6%, to $27.4 million as compared to $34.5 million in the second quarter ended 30 June The construction segment contributed $8.7 million to our Group s revenue in the second quarter ended 30 June 2018, compared to $22.5 million in second quarter ended 30 June The decrease in revenue from the construction segment was largely attributable to a lower percentage of revenue recognised from a few construction projects which were reaching completion, coupled with no revenue generated from a construction project at the PanIsland Expressway exit to Tampines Expressway during second quarter ended 30 June The $5.5 million increase in revenue from the maintenance segment was due mainly to some of the projects progressing to a more active phase during the second quarter ended 30 June The increase in rental income generated from investment properties was due mainly to rental income from the newly purchased property at 68 Bennett Street, East Perth, Western Australia during the second quarter ended 30 June Page 40 of 47

42 Cost of sales Current second quarter ended 30 Jun 2018 Previous second quarter ended 30 Jun 2017 $ 000 $ 000 Construction Maintenance 25,154 26,380 Rental income Total cost of sales 25,536 26,388 Our cost of sales decreased by 3.2% or $0.9 million from $26.4 million for the second quarter ended 30 June 2017 to $25.5 million for the second quarter ended 30 June The decrease in cost of sales was due mainly to: (a) (b) (c) the decrease in subcontracting costs which were mainly costs incurred for specialised works such as bored piling, asphalt works, mechanical and electrical works, soiltesting, landscaping and metalworks which are usually subcontracted to external parties; the decrease in the cost of construction materials due to lesser utilisation of materials; and the decrease in labour costs, which were partially offset by: (d) (e) an accrual of additional cost arising from a construction project at the PanIsland Expressway exit to Tampines Expressway following the mutual termination of the project between the client and our subsidiary corporation; and the increase in depreciation of property, plant and machinery and rightofuse assets, during the second quarter ended 30 June Page 41 of 47

43 Gross profit and gross profit margin Our gross profit decreased by $6.2 million or 77.5% from $8.0 million for the second quarter ended 30 June 2017 to $1.8 million for the second quarter ended 30 June Our gross profit margin decreased from 23.4% for the second quarter ended 30 June 2017 to 6.6% for the second quarter ended 30 June The lower gross profit margin for the second quarter ended 30 June 2018 as compared to the second quarter ended 30 June 2017 was largely attributable to the additional cost arising from a construction project following the mutual termination of the project between the client and our subsidiary corporation in the second quarter ended 30 June Other income Other income increased by $0.1 million or 55.9% from $0.3 million for the second quarter ended 30 June 2017 to $0.4 million for the second quarter ended 30 June The increase was due mainly to an increase in government grants received from the Building and Construction Authority for technology adoption and capability development in the second quarter ended 30 June Other gains Other gains of $0.2 million was due mainly to gain in foreign exchange resulting from the strengthening of the US dollar and Australian dollar against the Singapore dollar in the second quarter ended 30 June Administrative expenses Administrative expenses decreased by $0.9 million or 32.7% from $2.8 million for the second quarter ended 30 June 2017 to $1.9 million for the second quarter ended 30 June The decrease was largely attributable to lower directors remuneration (including profit sharing) accrued as a result of the lower profit generated by the Group for the second quarter ended 30 June Finance expenses Finance expenses increased by $0.3 million due mainly to: (i) (ii) interest expenses incurred on a bank term loan for the purchase of an investment property at 68 Bennett Street, East Perth, Western Australia; and interest from lease liabilities of $8,000 as a result of implementation of SFRS(I) 16 for the second quarter ended 30 June Share of results of associated companies and joint ventures The $0.2 million decrease in the share of profits of investments in the second quarter ended 30 June 2018 was due mainly to a reduced share of profit from Lakehomes Pte Ltd, the developer for the LakeLife Executive Condominium during the second quarter ended 30 June Page 42 of 47

44 Profit before income tax Profit before income tax decreased by $5.5 million or 94.9% from $5.8 million in the second quarter ended 30 June 2017 to $0.3 million in the second quarter ended 30 June The decrease was due mainly to (1) the decrease in gross profit of $6.2 million, (2) the increase in finance expenses of $0.3 million and (3) the decrease in share of profit of associated companies and joint ventures of $0.2 million. The decrease was partially offset by (1) the decrease in administrative expenses of $0.9 million, (2) the increase in other income of $0.1 million and (3) the increase in other gains of $0.2 million, as explained above. Income tax expense Income tax expense decreased by $0.8 million or 100.7% from an income tax expense of $0.8 million for the second quarter ended 30 June 2017 to a tax credit of $6,000 for the second quarter ended 30 June Tax credit for the second quarter ended 30 June 2018 arose from deductible temporary differences between the carrying value of assets and value of assets for tax purposes. The tax credit was partially offset by lower provision for current tax made in the second quarter ended 30 June 2018 due mainly to lower profit before income tax, as explained above. The effective tax rate for the second quarter ended 30 June 2017 was lower than the statutory tax rate of 17.0%, due mainly to (1) the profit before income tax of $5.8 million which comprised share of profit of associated companies and joint ventures of $0.4 million, which was already taxed at the associated company and joint venture levels, (2) statutory stepped income tax exemption and (3) a tax rebate of 20% on the corporate tax payable. Noncontrolling interests Noncontrolling interests of $0.2 million was due to contributions from our subsidiary corporation, Raffles Prestige Capital Pte Ltd in the second quarter ended 30 June Net profit Overall, for the second quarter ended 30 June 2018, net profit decreased by $4.7 million or 93.9% to $0.3 million as compared to $5.0 million for the second quarter ended 30 June 2017, following the decrease in profit before income tax of $5.5 million, which was partially offset by the decrease in income tax expense of $0.8 million, as explained above. Our net profit margin decreased from 14.4% for the second quarter ended 30 June 2017 to 1.1% for the second quarter ended 30 June Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results There is no material deviation in the actual results for the second quarter ended 30 June 2018 from what was previously discussed under paragraph 10 of the Company s financial statements for the first quarter ended 31 March Page 43 of 47

45 10. A commentary at the date of the announcement of the competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months Economic Outlook According to the Ministry of Trade and Industry ( MTI ) advance estimates, Singapore s economy expanded by 3.8% on a yearonyear ( yoy ) basis in the second quarter of 2018, moderating from the 4.3% growth in the previous quarter. Industry Outlook The construction sector contracted by 4.4% on a yoy basis in the second quarter, following the 5.2% decline in the previous quarter. The sector was weighed down primarily by the continued weakness in private sector construction activities. On a quarteronquarter seasonally adjusted annualised basis, the sector contracted by 14.6%, a reversal from the 0.9% growth in the preceding quarter. In January 2018, the Building and Construction Authority ( BCA ) projected the total value of construction contracts to be awarded this year to reach between $26.0 billion and $31.0 billion, with 60% of the projects coming from the public sector. Underpinned by an anticipated increase in demand for most building types and civil engineering works, which include major contracts for infrastructure projects like the NorthSouth Corridor, new MRT works, Deep Tunnel Sewerage System Phase 2 and the remaining package for Runway 3 by Changi Airport Group, construction demand from the public sector is expected to be between $16.0 billion and $19.0 billion this year. Over the medium term, construction demand is projected to be between $26.0 billion and $33.0 billion per year for the period of 2019 to 2020, and could pick up to between $28.0 billion and $35.0 billion annually for the period of 2021 to The public sector will continue to lead demand and is expected to contribute $16.0 billion to $20.0 billion per annum in 2019 to With respect to the private residential property segment, Urban Redevelopment Authority s ( URA ) second quarter ended 30 June 2018 flash estimates reflected an increase of 3.4% in private residential property prices, compared to the 3.9% increase in the first quarter ended 31 March Company Outlook And Order Book Update The operating environment is expected to remain challenging on the back of continued rising costs, competition and shortage of experienced and skilled manpower. However, the Group stays cautiously optimistic with its pipeline of projects. As at 30 June 2018, the Group s net order book stood at $208.3 million, with projects extending till On the property development and investment front, the Group s whollyowned subsidiary corporation, OKP Land Pte. Ltd. ( OKP Land ), has entered into a joint venture with Lian Soon Holdings Pte. Ltd. ( Lian Soon ) and other parties to develop the land parcel at Chong Kuo Road. Acquired by both OKP Land and Lian Soon for $43.9 million in February this year, the 4,288.9square metre land parcel has a leasehold tenure of 99 years and plans are in place to develop a residential condominium of about 85 units, subject to approvals from the relevant authorities. To further diversify its earnings and build a recurrent income, the Group expanded its property business beyond Singapore with the completion of the acquisition of a freehold office complex, 68 Bennett Street, in Perth, Australia for AUD43.5 million in April Page 44 of 47

46 Amber Skye obtained the Temporary Occupation Permit on 27 April Despite the latest property cooling measures, the Group will continue to market the remaining units of the 109 unit freehold development, after having sold more than 75% of the units. has a 10% minority investment in CS Amber Development Pte Ltd, the developer of Amber Skye and a subsidiary of CS Land Pte. Ltd.. As for the Group s construction segment, its whollyowned subsidiary Or Kim Peow Contractors (Pte) Ltd and the Land Transport Authority (LTA) have entered into an agreement to mutually terminate the contract for the construction of the viaduct from Tampines Expressway to Pan Island Expressway (Westbound) and Upper Changi Road East, with effect from 6 July The contract was awarded by LTA on 30 November 2015 and the mutual termination of the project is expected to have a negative impact on the earnings per share and net tangible assets of the Group for FY2018. Moving forward, the Group will continue to focus on its core civil engineering business and at the same time, seek suitable opportunities to enlarge its foothold in property, both locally and abroad, through strategic partnerships. Page 45 of 47

47 11. Dividend (a) Current Financial Period Reported On Any dividend declared for the current financial period reported on? No (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? No (c) Date payable Not applicable. (d) Books closure date Not applicable. 12. If no dividend has been declared/recommended, a statement to that effect No dividend has been declared/recommended for the second quarter ended 30 June Interested person transactions disclosure Name of Interested Person Aggregate value of all interested person transactions during three months ended 30 June 2018 (excluding transactions conducted under shareholders mandate pursuant to Rule 920 Aggregate value of all interested person transactions during three months ended 30 June 2018 conducted under shareholders mandate pursuant to Rule 920 $ 000 $ 000 Proj.B Studio (a) Provision of architectural services to the Group 6 Not applicable. The Company does not have a shareholders mandate pursuant to Rule 920. Notes: (a) Proj.B Studio is a business owned by Ms Biyi Oh, who is the daughter of Mr Oh Enc Nam, the Executive Director of OKP Holdings Limited. The Company does not have a general mandate from shareholders for interested person transactions pursuant to Rule 920. Page 46 of 47

48 14. Use of proceeds as at 30 June 2018 Exercise of 61,139,186 warrants at $0.20 for each share as at 4 January 2013 raising net proceeds of $12.2 million Use of proceeds To be used as general working capital for the Company Amount allocated ($ million) Amount utilised ($ million) Balance amount ($ million) The amount of $10.72 million had been utilised to fund the investment in and the loan to CS Amber Development Pte Ltd, an associated company of the Group. The unutilised proceeds are deposited with a bank pending deployment. 15. Confirmation pursuant to Rule 705(5) of the Listing Manual The Board of Directors of OKP Holdings Limited confirms that, to the best of their knowledge, nothing has come to their attention which may render the financial statements for the second quarter and half year ended 30 June 2018 to be false or misleading in any material aspect. 16. Confirmation that the issuer has procured undertakings from all its directors and executive officers The Company confirms that it has procured undertakings from all its directors and executive officers in the format set out in Appendix 7.7 pursuant to Rule 720(1) of the Listing Manual. BY ORDER OF THE BOARD Or Toh Wat Group Managing Director 6 August 2018 Page 47 of 47